Posts Tagged ‘debt management for credit card debt’

A Simple DIY Plan For Credit Card Debt Management

Credit card debt management can be an overwhelming task, especially for American consumers who are the worst victims of high interest debt traps. The problem has hit them there where it hurts most. But luckily, there are plenty of things that a person can do to crawl out of the deep valley of debt. Following is a simple DIY plan that will definitely work; the only condition is that you must have that strong dose of self-determination.

Review Your Monthly Finances

The first thing you have to do is to review each and every aspect associated with your monthly finances. Get a pen and paper and write down all the details, including your regular and irregular monthly income, the amount of debt you owe, the list of the credit card companies you owe the debt to, the current minimum payments, current outstanding balances, and the rate of interest.

Prioritize Your Debts

The next step for this simple DIY plan for credit card debt management is to prioritize your debts in a way that the highest rate debt must come first followed by lower rate ones. The debts must be arranged in a list in decreasing order of the rate of interest. Try sorting the list again, but now the variable should be the current outstanding balance. Find out the total amount of minimum payment that you need to pay every month.

Can You Afford The Minimum Payment?

Considering that you are working on this plan, you are not likely to be in a situation where you can afford the total monthly payment; that’s why you are here. But, you are still recommended to do a thorough analysis and find out if the payments are really unaffordable. Do some strict budgeting. Try to cut down or avoid some expenses. This will save you some money. You may even consider getting a second job. Do everything possible that can help you get some extra income. If you still cannot afford the minimum monthly payments, give one of the poor lenders (where you owe the debt at a very low rate of interest and the amount is also not very big). Alternatively, if you owe a very high amount of debt to a company, you should consider contacting the company and working out a debt settlement plan, where you have to convince the lender to accept a certain percentage of the total amount of debt in a one time final settlement. If even that does not work, try to negotiate a favorable repayment plan, such as with lower rates and no penalty charges.

Strategically Tweak Your Plan

As per this credit card debt management plan, you should focus on paying off those debts first that you can easily afford. Try to pay much more than just the minimum payment. The idea is to pay off this debt as fast as possible. Save some money through strict budgeting or get extra income from a second job and contribute this additional money to pay off the outstanding balance on this card. Once the debt is paid off in full, you should use the entire monthly payments that you were making toward this debt to pay off the ugliest-looking debt on the list. It can be the one with a very high amount of balance with a very high rate of interest. This strategy can do wonders if combined with a negotiated repayment or settlement plan with the creditor.

Overall, as we can see, if you follow a careful approach and show some great financial discipline with self-determination, you can easily come up with your own credit card debt management plan that is quite unlikely to fail.

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